There are dozens of countries around the world with low or even zero taxes, making them highly attractive destinations for those looking to optimize their tax burden. Whether you are an entrepreneur, crypto investor, digital nomad, retiree, or live off dividends, finding a favorable tax residency can make all the difference.
At Tax Nomads, we work with multiple jurisdictions, but we understand that choosing the best option is not always easy. With so much information and so many appealing destinations, it can be challenging to know where to start.
That’s why we’ve created this ranking of the 10 best tax-free countries in 2025, based on their tax advantages, popularity, and key factors such as cost and quality of life or ease of obtaining residency.
So, if you’re tired of paying high taxes and looking for the best alternative to escape your tax hell, or simply want a smarter tax strategy, keep reading: this ranking will help you find the perfect option for you.
Cyprus – Non-Dom and Tax Residency in 60 Days
When it comes to global tax optimization, Cyprus takes the top spot. While it is not a completely tax-free country, its system is so flexible that many individuals pay between 2.65% and 0% in taxes.
Moreover, Cyprus offers one of the easiest tax residencies to obtain. With just 60 days in the country, you can secure your tax residency certificate. There are even rumors that in the future, they may eliminate the minimum stay requirement altogether.
Why is Cyprus the ultimate tax destination?
- Non-Dom Regime: Allows 0% tax on foreign dividends and interest for 17 years.
- No taxes on donations, inheritances, or capital gains, including crypto and stock investments.
- Corporate tax rate of 12.5%, but companies qualifying for the IP Box regime can pay as little as 2.5%.
But the most interesting thing about Cyprus is that the few taxes paid translate into tangible benefits—something that doesn’t happen in other countries where you can achieve a purer 0% tax rate but at the cost of covering everything privately.
In Cyprus, however, those taxes provide access to free and high-quality public healthcare, free public education, toll-free roads, and a pension system, making it much more attractive for those looking to optimize their tax burden without giving up certain benefits.
Unlike other small countries, such as Andorra, which can feel more limited, Cyprus offers everything from paradise beaches to snow-capped mountains and ski resorts in winter. Moreover, its cost of living is moderate and even low by European standards.
And the cherry on top? Although Cyprus remained under the radar until recently, its current boom is positioning it as a key investment destination and a hub for international entrepreneurs and investors. With direct flights to Europe and Asia, more and more talent is settling on the island, taking advantage of its benefits before its rising popularity drives up prices and opportunities become scarce.
Paraguay – The Easiest Tax Residency in the World
If someone had told you a few years ago that Paraguay would become one of the best tax residencies in the world, you probably wouldn’t have believed them.
However, this country has rightfully earned the second position in our ranking thanks to the extreme ease of obtaining tax residency and its territorial tax system.
To be considered a tax resident in Paraguay, you only need to register and activate your RUC (Unique Taxpayer Registry), a simple process that grants you taxpayer status without the need to live in the country.
This means you can become a tax resident (and even access tax certificates under the Double Taxation Agreement) without having to fully relocate—something that hardly any other country with similar tax benefits offers.
In terms of taxation, Paraguay is one of the most attractive destinations in the world. All income earned outside the country—dividends, capital gains, service income, cryptocurrency or stock market investments—is completely tax-exempt, except for a few very specific exceptions that should be reviewed in advance.
And for those generating income within the country, the tax system remains incredibly low, as no tax exceeds 10%, not even VAT or income tax.
On top of this, Paraguay boasts a very low cost of living, a constantly growing economy, and a good level of security compared to other Latin American countries.
It’s no surprise that more and more entrepreneurs and tax nomads are turning their attention to Paraguay, not only to establish their tax residency but also as an interesting destination for investment before its potential skyrockets.
Panama – The Ultimate Tax Haven
Panama is, without a doubt, one of the most iconic tax havens in the world.
Its territorial tax system allows both individuals and businesses to avoid paying taxes on income generated outside the country, including dividends, interest, and capital gains.
Additionally, it is an ideal destination for the use of international tax structures, as it does not enforce CFC rules or effective management rules. Panama remains firm in its tax advantages and does not yield to international pressure, making it one of the most solid options for those looking to live tax-free.
However, it ranks third on our list because it is on the European Union’s blacklist, which can be a drawback for certain types of businesses.
Even so, Panama remains an attractive destination beyond its tax benefits. Panama City has been recognized by Forbes as the fourth-best city to live in worldwide, thanks to its warm climate year-round, moderate cost of living, relative safety, and strategic business location.
Many dismiss the country due to the mistaken belief that obtaining residency requires an investment of over $200,000. While this option does exist, there are far more accessible alternatives, such as demonstrating recurring income, receiving a pension, or simply incorporating a company in the country.
Dubai (UAE) – The Tax Oasis of the Middle East
The United Arab Emirates, globally known for its iconic Dubai, is the largest business hub in the Middle East and one of the most important worldwide.
Its tax appeal is undeniable: there are no personal income taxes, meaning that tax residents are not even required to file a tax return.
The only downside to its tax regime is the recent introduction of a 9% corporate tax, which only applies to businesses with profits exceeding approximately $100,000. Even so, it remains one of the lowest in the world.
Beyond taxation, the UAE offers luxury, security, a vibrant business ecosystem, and world-class services.
However, it’s not perfect for everyone: the cost of living can be high (though still more affordable than many European capitals), and during some months of the year, temperatures can exceed 45°C, making outdoor life practically impossible.
If not for these last factors, the United Arab Emirates would have secured a spot in our top 3, but for now, it holds fourth place.
Dominican Republic – 0% Taxes in the Caribbean
The Dominican Republic is much more than just paradise-like beaches and year-round warm weather. Its greatest appeal is that tax residents only pay taxes on income generated within the country, while foreign-earned income remains completely tax-free.
However, this advantage is only guaranteed for the first three years unless you obtain a special residence as a rentier, pensioner, or investor, which allows you to extend this territorial taxation indefinitely.
The process to obtain residency in the Dominican Republic is relatively fast and accessible. There are three main ways to achieve it: proving passive income of at least $2,000 per month over the last five years, receiving a lifelong pension of at least $1,500 per month, or investing $200,000 in the country.
Another key point is that the Dominican Republic does not apply CFC rules, effective management rules, or exit tax, allowing for top-level tax planning. Moreover, the country is increasingly positioning itself as a key destination for international investors, attracting foreign capital and gradually becoming a business and networking hub in the heart of the Caribbean.
For those looking for more than just tax residency, the Dominican Republic also offers an accelerated path to citizenship, making it possible to obtain a Dominican passport in just two years of legal residency—or in as little as six months if residency is obtained through an investor visa.
Thailand – A Tax Haven in Southeast Asia
Thailand, with its paradise-like beaches, majestic temples, and a cuisine that delights the senses, has become an attractive destination for those seeking a combination of quality of life and tax benefits.
Its tropical climate and diverse lifestyles—ranging from the vibrant metropolis of Bangkok to peaceful rural villages—offer options for all preferences.
From a tax perspective, Thailand operates under a semi-territorial system. This means that foreign-earned income is not subject to taxation as long as it is not remitted to Thailand.
A common strategy is to transfer funds into the country before becoming a tax resident and live off previously transferred savings, keeping foreign income tax-free.
The biggest challenge to settling in Thailand is obtaining residency, but there are several appealing options. The Thailand Elite Visa allows for extended stays in exchange for a fee, while visas for digital nomads and retirees over 50 are the best alternatives for those who meet certain financial requirements.
Additionally, there are options for investors and highly skilled professionals through long-term residency programs.
Costa Rica – Pura Vida Without Taxes
Costa Rica is one of the most attractive destinations for tax nomads thanks to its territorial taxation system, which only taxes income generated within the country.
Beyond its tax advantages, Costa Rica offers a high quality of life, with a safe environment, a well-regarded healthcare system, and a culture rooted in the “pura vida” philosophy, which promotes well-being and happiness. Its political stability sets it apart in the region, standing out as one of the few Latin American countries without a military.
The country not only allows residents to live without paying taxes on foreign income but also lacks CFC rules, wealth taxes, inheritance taxes, or exit taxes.
There are several ways to obtain residency in Costa Rica, including options for rentiers, retirees, and investors, as well as a digital nomad visa.
After three years with temporary residency, one can apply for permanent residency, which grants unrestricted work rights and does not require a minimum stay. Citizenship, on the other hand, requires seven years of permanent residency, reduced to five for citizens of Spain and Latin America.
Spain – The Beckham Law
Spain surprisingly makes this list thanks to the Beckham Law, a tax regime that allows certain new residents to benefit from highly favorable taxation.
Although the country is known for its high tax burden, those who qualify for this law can enjoy one of the best qualities of life in Europe while paying significantly lower taxes.
The regime offers a full exemption on taxes for foreign dividends and capital gains. Additionally, it eliminates taxation on foreign wealth and sets a fixed 24% income tax rate on earnings up to €600,000.
To qualify, one must not have been a tax resident in Spain for the past five years and must relocate for work-related reasons.
The Beckham Law isn’t for everyone, but for those who qualify, it can lead to significant tax savings for six years—especially for high earners with foreign income or those planning to sell assets tax-free.
Without a doubt, it has become an attractive alternative in Europe after the elimination of Portugal’s NHR program.
Bulgaria – The Hidden Gem of Eastern Europe
Bulgaria is the Hidden Tax Gem of Europe. Although few have it on their radar, this country combines ultra-competitive taxation with an incredibly low cost of living.
It’s no coincidence that more and more freelancers and digital nomads are settling in Bansko, a small mountain town that has become a remote work paradise.
The personal income tax rate is only 10%, but if you work as a freelancer, you can reduce it to 7.5% thanks to an automatic expense deduction. And if you run a company, the corporate tax rate is also 10%—one of the lowest in the EU. In terms of taxation, Bulgaria plays in a league of its own within Europe.
Additionally, in some cases, you don’t even need to spend 183 days a year in the country to be considered a tax resident. However, the language can be a challenge, and Bulgarian bureaucracy moves at its own pace—but nothing that can’t be handled with patience and a good advisor.
In short, if you’re looking for a destination with low taxes, great connectivity, and a growing nomad community, Bulgaria definitely deserves a spot on your list.
Andorra – Low-Tax Enclave in the Pyrenees
Andorra remains one of the best tax-friendly options in the world, offering a highly competitive tax system: 0% personal income tax up to €24,000, with a maximum of 10%; a 10% corporate tax rate; and no wealth, donation, or inheritance taxes.
However, it ranks tenth in our list as it has lost some competitiveness due to the rising cost of living and stricter residency requirements.
Active residency requires creating a company with at least a 34% stake and a €50,000 deposit, while passive residency demands a minimum investment of €600,000 and at least 90 days of annual stay. Although the digital nomad visa offers a more accessible alternative, its selection process is strict.
Even so, Andorra continues to stand out for its stability, security, and quality of life, as well as being an excellent networking hub in Europe and one of the best options for high-net-worth individuals.
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